This is the part of the S1 that you quoted that gets to the heart of my question:
“Some are only available through paid subscriptions, which include access to specific proprietary features and also include support.”
If the key benefit to having a paid subscription is the support that is offered, then Elastic is a service business, and not a SaaS business. Now, if the key benefit is more related to the proprietary features, and support is a marginal offering, this isn’t an issue and Elastic can indeed be considered a SaaS offering. But if the support is the key driver, it’s something different.
Under risk factors Elastic mentions their employee headcount a couple of times. Of course, a growing company needs to increase its headcount. But a company that relies on support personnel is going to need to increase its headcount much faster than a company that only needs to invest in developers.
From the S1:
“Our employee headcount and number of customers have increased significantly, and we expect to continue to grow our headcount significantly over the next year. For example, our total number of customers has grown from over 2,800 as of April 30, 2017 to over 5,000 as of April 30, 2018 to over 5,500 as of July 31, 2018. The growth and expansion of our business and offerings places a continuous significant strain on our management, operational, and financial resources.”
interesting that they break out their customer numbers but not their headcount numbers…
“As we expand our business and operate as a public company, we may find it difficult to maintain our corporate culture while managing our employee growth. Any failure to manage our anticipated growth and related organizational changes in a manner that preserves our culture could negatively impact future growth and achievement of our business objectives. Additionally, our productivity and the quality of our offerings may be adversely affected if we do not integrate and train our new employees quickly and effectively. Failure to manage any future growth effectively could result in increased costs, negatively affect our customers’ satisfaction with our offerings, and harm our results of operations.”
This appears to be standard boilerplate, but in light of my question I find it interesting that they are so explicit about the challenge of managing employee growth.
Also, Denny’s comments are interesting to me as this line of questioning appeared in my head after reading a negative blog post about MongoDB as an investment. So it’s curious that MongoDB comes up in this conversation as a related case. After reading the blog post linked below, I concluded that the author may have a point, but the point had been rendered moot through the introduction of Atlas, which follows Denny’s reasoning exactly. I asked myself if the author’s point, while no longer being relevant to MongoDB, might be applicable to Elastic in its current form. I couldn’t figure it out, so I brought it up here.
Blog post in question: https://medium.com/@honnibal/what-mongodb-tell-the-market-is…